While the leaders of the free world continue to bicker back and forth about a few measly trillion dollars, the leaders of the American sports world proved a bit more capable in their negotiations over a few measly billion dollars.
The NFL players and owners recently came to terms on a new Collective Bargaining Agreement, which is great news for football fans. For a while there, it looked like we'd be forced to spend time with our wives and families on Sunday. Fortunately, we've been saved, as cooler heads prevailed, and the NFL players and owners found it in their hearts to take tons of our money and split it on agreeable terms.
From what I've read, it seems like a pretty fair deal all around. The owners get to keep more money, but the players get a firm salary floor for each team, a raised minimum salary, and even extra health benefits (which seemingly were pretty disgraceful).
But, there was one group of players that got completely jobbed. Well, they aren't exactly players yet. They're the NFL rookies, pre-rookies, pre-pre-rookies, and even some kids who are probably tearing it up at 5th grade recess right about now.
As part of the CBA, the NFL Players Association agreed to much tighter limits on how much early first round draft picks can receive in compensation for their first contracts. Reports indicate that the guys at the top could lose more than 50% of what they would've earned before the new agreement.
I agree that rookie salaries were completely out of hand, with tons of guaranteed money going to players who could develop into All-Pros but could just as easily crawl into a bottle of cough syrup never to be heard from again (Ahem, JaMarcus Russell)
But it had to have been easy for the players to give that up in the negotiations. After all, rookies aren't members of the NFLPA before they sign their first contracts. I sincerely doubt all the veterans sat around the table depressed that the high-end rookies would have to deal with $25M instead of $50.
So maybe they turned some rookies into anti-union Republicans. We'll have to see if Packers rookie Derek Sherrod starts stumping for Scott Walker (my guess would be no).
But thinking about the impact on rookies got me wondering what impact the new CBA might have on future drafts. Specifically, I started wondering if a new wage scale would increase the likelihood of trades, particularly in the beginning of the first round.
Conventional wisdom, ok, my own opinion of what conventional wisdom should be, told me that trading up for a high first round pick was always a terrible idea. NFL talent evaluators should be sure of only one thing...that they make tons of mistakes. In my view, trading multiple picks and chances to get them right for one single shot at a 'top 10' player, is like punching Jesus in the face and then seeing if he hits you with a lightning bolt (or whatever Jesus' superpowers give him, I don't know a ton about the Bible).
Those trade ups were even more risky because of the huge financial investment involved, e.g., the aforementioned Mr. Russell.
But now, these guys are so much cheaper! 50% mark downs on all top first round draft picks! Let the bargains begin!
But wait. As I thought about it, I quickly realized that idea didn't make any sense.
NFL teams place a certain value on each draft pick. They probably don't lay it all out on paper, but they probably have some idea in some combination of their heads. That value, because we don't have a better way to quantify it, would be most easily translated into money. Let's call it X.
Now let's think about it even further. If you're a team sitting at pick 27, and you want to go get pick 10, because you ignored my advice and think you're an excellent talent evaluator. Well, you've got to go call up the team at number 10 and offer them some stuff.
But you don't offer them X. Because X is actually made up of a couple different components
A - The Maximum amount of NFL goods (players and picks) you'll give up for pick #10
B - The financial cost of signing player 10 to a contract (which is fairly predictable based on draft slot)
C - The remainder, X-(A+B), which is some barely tangible estimate of future performance value
So great, in the new world of new CBAs, the cost of component B just shrunk by half. Yay for us.
Unfortunately, in this new world of new CBAs, there's also ESPN, NFL Network, and 10,000 Twitter reporters who haven't stopped talking about the new CBA (I suppose there are bloggers too, but no one reads them anymore. Blogging is so 2005.)
So all the other teams are just going to start asking for more A. Maybe even lots more A. Now, you may be able to negotiate a better deal, because they'll be more information asymmetry with component A than component B (especially if you're trading them your own players), but that also could work against you.
Anyway, that's just a theory. If we wanted to test and see if that's actually the case, we'll have to compare trades of high first round picks and see how much component A, the value of NFL goods, are required to trade for these picks. Stands to reason it would go up as the teams looking to trade down try to extract more value.
I tried to look into it by comparing the 2010 NFL draft trades to the 2011 NFL draft trades in the first round, under the rationale that in the 2011 draft NFL executives knew a new CBA was coming, and new the players would sacrifice the rookie contracts as part of the deal, so any team trading out of the top end of the first round would definitely ask for more component A.
And if the biggest trade of the draft is any indication, we may start seeing just that.
Cleveland owned pick number 6 in the first round, and Atlanta wanted to move up.
So in return, Atlanta gave Cleveland the 26th pick in the first round, pick 59 in round two, pick 124 in round four, and their first and fourth round picks in 2012.
Sounds like a lot to me (although to be technical, I think it also determines on your personal discount rate on NFL draft picks. I'm not quite sure what this should be...maybe index it to LIBOR or something)
But obviously, we'll have to wait and see how this might change future draft-day wheeling and dealing. I think it's safe to assume teams at the top will demand even more, which may lead to bigger deals, more punditry and more exaggerated preliminary conclusions on winners and losers without any kind of objective performance to measure.
And I will be there watching it all, hoping my wife doesn't yell at me to stop watching the draft because it's not even actual football.
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